Rents fell 1.2% year on year in the UK in the third quarter of 2018
Rents in the UK fell by 1.25% year on year in the third quarter of 2018, taking the average monthly rent to £730, according to the latest index to be published.
The decrease was due to lower rent rises for larger properties, which traditionally have driven average rents upwards, according to the index report from lettings franchise Belvoir.
Looking ahead to 2019, Belvoir predicts that property will remain a good long term investment for several reasons, including more demand from people wanting to rent and slowing price growth benefitting landlords seeking to increase their portfolios.
Belvoir predicts that yields are likely to remain good in the year ahead, ranging from 4.5% to 12% and low interest rates allow investors to lock in to good mortgage deals and that overall buy to let will still be a good investment.
The index also shows that there was no real change in void periods during the third quarter, suggesting a relatively healthy demand/supply for rental properties. Eviction rates remained extremely low, with over 50% of Belvoir offices carrying out none in the quarter.
While the number of offices evicting four or more tenants is on the rise, but the report pointed out that key reasons cited are non-payment of rent or landlords selling their properties, which cannot be legislated against.
The research shows that tenants tend to stay in their rental accommodation for the length of time that suits them. At the start of the index in 2008, most offices reported that the majority of people stayed for 13 to 18 months. This has risen to 19 to 24 months.
Dorian Gonsalves, Belvoir chief executive officer, said that this suggests that two year tenancy agreements are probably more likely to be what tenants would prefer, rather than the three year agreements that were being discussed by policy makers earlier this year.
Statistics show a slight increase of 48% to 52% of landlords selling up to three properties and a similar number of landlords selling between four to five properties compared to the second quarter and there was a decrease from 17% to 12% for landlords selling six to 10 properties.
Two years ago 10% to 18% of offices were reporting no sales of landlord properties, but this figure has now fallen to 4% to 5%. ‘Overall, our conclusion is that the number of landlords selling properties is increasing, albeit not at the rate that some research has suggested,’ Gonsalves explained.
He pointed out that the main reasons for landlords exiting the market are tax changes, constant regulation and increasing legislation, landlords moving back in, and lower investment returns, as well as uncertainty over Brexit, and what this will mean for the market.
When selling properties, only 19% of offices reported properties being sold to first time buyers as the government hoped, however, according to our survey, 33% of offices reported properties are being sold to other landlords and 23% are general sales. ‘This suggests the Government’s plan to increase home ownership by reducing the attractiveness of buy to let isn’t necessarily working,’ said Gonsalves.
‘Whilst landlords are operating in an environment that is slightly more expensive and more tightly regulated, with over 10 million renters in the UK we predict that property will remain the tenure of choice for many millions of people in the UK for a very long time,’ he added.